New research challenges casino cannibalization concerns, advocates for online casinos as catalyst for growth

New research by Eilers & Krejcik Gaming, commissioned by iDEA Growth, challenges concerns about casino cannibalization, asserting that the legalization of online casinos may, in fact, benefit existing brick-and-mortar establishments in a state.

The study reveals that land-based casino revenue experiences an average quarterly increase of 2.44% after the introduction of mobile casino apps, based on data from U.S. states with both physical and online casinos.

“This study offers compelling evidence that online gambling is a catalyst for growth, not a competitor to land-based casinos. The research underscores the conviction that legalizing it drives beneficial economic impact across the industry,” iDEA Founder and General Counsel Jeff Ifrah said 

“As lawmakers consider the merits of legalizing and regulating iGaming, they can be assured that it will complement the land-based casinos to deliver even more tax revenues to their states and establish meaningful consumer protections.”

The study also predicts an annual boost of 1.7% in casino revenue for a typical state following the legalization of iCasino.

The closer you look at the data, the better it is for the casino markets that have added iGaming. Nearly all states with mature casino markets have experienced land-based casino declines this century,” Eilers & Krejcik Gaming Managing Director Matt Kaufman said.

States that have introduced iGaming have been materially more likely to see that decline flattening, and at times even returning to growth, compared to states with only land-based casinos.”

A Maryland report conducted by The Innovation Group, commissioned by the state’s lottery, acknowledged casino cannibalization concerns but suggested mitigation through tethering digital licenses to brick-and-mortar facilities. The latest report commissioned by iDEA Growth questions The Innovation Group’s methodology, citing flaws such as the “erroneous double-counting of population growth” and the inclusion of minors in the potential gambling population.

The new iDEA Growth report points out several issues with The Innovation Group’s findings, including the use of casino performance data from New Jersey and Delaware spanning from 2019 to 2022. The iDEA Growth report argues that this data might be misleading regarding cannibalization, as these states allowed legal online casino games in 2013.

Scheduled for discussion later this month, Maryland legislators will assess a pair of online casino bills in committees.

Cannibalization fears are also an ongoing debate in New York, where nearly 700 employees of Resorts World Casino at Aqueduct have expressed strong opposition to a bill seeking to legalize online gaming in the Empire State.

In a signed letter, the workers criticized state Sen. Joe Addabbo, Chairman of the Senate committee on racing, gaming, and wagering, who has been advocating for gaming legislation since 2019, the New York Post reported.